international trade and access to markets

• acquisition is a transaction where a TNC buys another company in order to expand (usually a smaller company)
• China's open door policy (1978) - allows China foreign industry and TNCS to promote a modern and thriving China
• containerisation is a logistical system of transporting large amounts of goods in steel containers , each carrying 25,000kg of goods
• core region - wealthier , industrially developed countries that benefit and control global markets , making periphery regions depend on them
• cumulative causation - like a multiplier effect , as core regions increase in prosperity , the periphery regions will also grow due to their links with the core
• downward transition zones - a country or city with predicted economic decline , industrial reduction or switched off from globalisation (e.g Scotland , Turkey , Brazil
• economies of scale - concept of increasing profits by producing larger amount of products , as overall the avergae price to manufacture each product is lowered
• • Offshoring is where a TNC moves parts of its production process to other countries. This is often developing countries where production costs (e.g. labour or land) are lower.
• two types of services:

  • high level
  • low level
• invisible goods - goods that can't be seen , heard or touched physically e.g insurance
• trade can either be in physical goods , invisible goods or information (e.g video streaming)
• trade bloc - trading association supports free trade between member countries without tariffs or charges
• countries outside of trade blocs may have to pay extra to trade within bloc
• the EU is a trading bloc
• barriers to importing + exporting products:

  • tarriffs
  • non-tax barriers
  • outright bans
• a tariff is a tax on trading products
• non-tariff barriers - e.g quotas (fixed number of goods you can trade at once)
• A TNC is a country that operates in at least 2 countries e.g Walmart
• TNCs DON'T have a centralised management system in one country
• few companies that want to invest in HICS due to less benefits (e.g high wages)
• Key groups with power:

  • G7
  • EU
  • China
• G7 - seven biggest countries in the world e.g US , Canada , Japan
• G20 - twenty most developed countries with the biggest economies e.g Indonesia , Russia
• richer countries generally control trade agreements as those who enter agreements with richer countries tend to benefit from their wealth
• As richer countries have the upper hand in term of trade , they can pressure low income countries into making more beneficial deals with richer countries.

  • lower taxes , reduce tariffs , set up SEZ to encourage investment
• rich corporations and TNCs can influence trade , may create sanctions on other countries or refuse to trade with them in order to get their way
• Special Economic Zones - areas within a country that don't have the same trading regulations as the rest of the country
• SEZ have lower tarriffs and lower taxes
• SEZ increase access to markets as countries can afford to invest in the area , increasing international trade from that area
• countries with less wealth have less access to markets
• HIC companies can afford to pay for higher tariffs on exports and imports. Able to ake profits and receive products
• HICs increase their access to markets through FDI into foreign markets. Saves companies money through cheaper labor and often avoid tariffs as they produce products within the country (e.g Japanese car manufacturers = production in EU)
• outsourcing = moving jobs
• offshoring = moving company to another country